A tax bracket is the range of incomes taxed at given rates, which typically differ depending on filing status. In a progressive individual or corporate income tax system, rates rise as income increases. There are seven federal individual income tax brackets; the federal corporate income tax system is flat.
Federal Income Tax Brackets
As of 2023, the federal individual income tax in the U.S. has rates ranging from 10 percent to 37 percent. As you can see in the table below, tax rates increase with income levels, resulting in what’s called a “progressive” income tax system. High-income families pay a disproportionate share of the tax burden, while low- and middle-income taxpayers shoulder a relatively small tax burden.
| Tax Rate | For Single Filers | For Married Individuals Filing Joint Returns | For Heads of Households |
|---|---|---|---|
| 10% | $0 to $11,600 | $0 to $23,200 | $0 to $16,550 |
| 12% | $11,600 to $47,150 | $23,200 to $94,300 | $16,550 to $63,100 |
| 22% | $47,150 to $100,525 | $94,300 to $201,050 | $63,100 to $100,500 |
| 24% | $100,525 to $191,950 | $201,050 to $383,900 | $100,500 to $191,950 |
| 32% | $191,950 to $243,725 | $383,900 to $487,450 | $191,950 to $243,700 |
| 35% | $243,725 to $609,350 | $487,450 to $731,200 | $243,700 to $609,350 |
| 37% | $609,350 or more | $731,200 or more | $609,350 or more |
| Source: Internal Revenue Service | |||
Explore Latest Tax Brackets How Do Tax Brackets Work?
State Tax Individual Income Tax Brackets
State individual income taxes range from single-rate flat taxes to Hawaii’s 12-bracket system. Many states have several narrow tax brackets close together at the low end of the income scale, including a zero bracket created by standard deductions and exemptions. These can yield a tax system that is functionally flat, since most taxable income is exposed to the top marginal rate. On the other hand, some states impose progressive rate structures that can cause individuals and noncorporate businesses to alter their income-earning and tax-planning behavior.
Connecticut and New York apply the rate of the top income tax bracket to previous taxable income after the taxpayer crosses the top bracket threshold, which is known as income recapture, while Arkansas imposes different tax tables depending on the filer’s level of income. Income recapture provisions are poor policy, because they result in dramatically high marginal tax rates at the point of their kick-in, and they are nontransparent in that they raise tax burdens substantially without being reflected in the statutory rate.
Corporate Income Taxation
Traditional arguments for graduated-rate taxation have little bearing on corporate taxation, since the size of a company is not reflective of the overall income of its owners or investors. In contrast to the individual income tax, there is no meaningful “ability to pay” concept in corporate taxation, and single-rate corporate income tax systems are most consistent with the sound tax principles of simplicity and neutrality.
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